Trading strategies for copper and aluminum by Tradebulls Securities

Copper needs a decisive breakout below 657 for sellers to get active

Gold market is taking a nap as the bull market has stalled. Bitcoin is replacing gold's role in the portfolio of many investors, and until that changes, gold will have to share its spotlight with the cryptocurrency. Benchmark 10-year Treasury yields rose to 14-month highs on Tuesday at 1.776 per cent and the US dollar advancing against all currencies were the culprit for gold’s decline. US dollar also found support after news of the collapse of highly leveraged investment fund Archegos Capital. Gold was unable to hold its key support level of $1,700 an ounce on Tuesday. Year-to-date, gold is down 12.5 per cent. We don’t believe rising US yields will go out soon. We expect gold to bounce since it is trading near oversold region but we are not bullish in medium term and sell on rise is recommended.

Amid a rally in US dollar, silver has seen $24 support taken out. May silver futures prices hit a 3.5-month low and bears have overall technical advantage. Silver needs to break $25.50 before any upside momentum can gather pace and next support for silver comes around $23.70. In MCX, support comes at 61,500 and 60,000 while resistance comes around 65,200. We recommended sell on rise as main trend still is bearish.

Crude oil prices have risen ahead of OPEC+ meeting. The expectation is that OPEC+ is going to show supply discipline, so that's pivoting the market. Saudi Arabia is prepared to back an extension of the supply cuts into June, including its own voluntary cut, to boost prices. Crude has made double bottom around 4200 and since then have smartly recovered. Above 4,530, we may see prices going higher till 4,620 and so we would advocate buy on dips till 4,200 is not breached on the downside.

Natural Gas prices are going back and forth in the range of 190-198. The initial rally on Monday fizzled out and then reached 200 EMA. The market is trying to figure out where to go next. There is no fundamental set up which indicates any bullish bias. Generally this is the season where demand for natural gas is low so prices tend to remain weak.Having said that, we did get a little bit overdone to the downside recently, so I think what we are looking at here is a bounce that is just waiting to happen, perhaps more or less from a technical standpoint. We would recommend sell on rise till 200 is not taken out from the top.

Recommendations

Sell Copper below 657 | TGT: 648 | Stoploss: 664

Copper is trading in range of 670-657. It needs to break the range for decisive move. RSI_14 is showing signs of exhaustion but buyers are getting active at the lower end of the range. So, we need a decisive breakout below 657 for sellers to get active. It is also trading in range of 20 and 50-DMA where the 50-DMA support comes around 658 and resistance of 20-DMA around 671. Thus, we recommend short below 657 for expected target of 648 and stoploss of 664 on a closing basis.

Sell Aluminum below 175 | TGT: 171 | Stoploss: 178

Aluminum is trading in trending channel line and is currently at the lower end of the channel line. If it breaches below the channel line, then the trend will shift from bullish to bearish. Along with channel line, support also comes in form of 20 DMA. So we would recommend to short only below 175 which will give confirmation of trend reversal with expected target of 171 and stoploss of 178 on a closing basis.
Disclaimer: Bhavik Patel is Sr. Technical Analyst (Currencies/Commodities) at Tradebulls Securities. Views are personal.